By Ryan Maloney
The effect of the United States Trade Representative (USTR) announced tariffs on small U.S. businesses is dramatic and have the potential to become devastating. Not only would it effect suppliers and wholesalers of wine and single malt scotch, but it would also have an influence at the retail level. Jobs and stores will be lost right on Main Street USA where the impact will be felt most.
Wine in the first round of tariffs was a 25-percent increase. Some suppliers were able to absorb it, but 100-percent will be much tougher and for smaller retailers, impossible.
In the case of European Whisk(e)y, there are different hurdles. Single malt scotch sent to the U.S. has to be specially bottled in a 750 ml. While the rest of the world (except South Africa) uses 700 ml. So if there are more impediments like a 25-100-percent tariff, anything but the basic whisk(e)y will be shipped to U.S. The slack will be taken up elsewhere especially China where demand is high.
Many smaller retailers of wine and whisky have invested deeply in specialty items that the big chains and big box stores do not carry, these items are exactly the products that have been targeted by the tariffs! You are essentially taking away the one advantage these stores have to stay relevant and in business. It is unfathomable that they are being sacrificed to prove a point about a dispute between two international mega corporations in a field not even relevant to the same industry!
Further these new round of tariffs are now being used a bludgeoning tool against the European Union to help internet corporations that are not even paying their fair share domestically! Boeing, Facebook, Amazon, and Google are well equipped to weather international trade disputes within their own industries.
Unfortunately, the Mom and Pop stores are not designed survive when their livelihood is being used as a chess-piece in a multi country trade dispute. Especially a trade dispute in which they have no say and no recourse. It is important to note that there are no subsidies to the small businesses that will be effected by these tariffs, as there were with agricultural tariffs. There are better ways within each of these disputed industries to handle this without putting undue stress on an industry that is dominated by small businesses.
Ryan Maloney is President, Massachusetts Package Store Association.